GCC retail sector set to post steady growth

Manama, December 19, 2012

The retail industry in the GCC is set to thrive due to increasing purchasing power, growing expatriate population, changing lifestyle and an expanding tourism and hospitality industry, said an expert.

"Retailers have benefited from the government's initiatives and progressive policy agenda and have a healthy period of growth ahead of them," Sameena Ahmad, managing director of investment bank Alpen Capital was quoted as saying in a report in our sister publication, the Gulf Daily News.

"The region's retail sector has displayed strong resilience in the face of global economic downturn and is expected to continue to grow at a steady pace given its attractiveness to tourists and residents in terms of geographic location, developed logistics and availability of diverse and quality shopping options.

"While the sector presents attractive opportunities, it is highly competitive and retailers need to continue to innovate, so that they can achieve sustainable growth and profitability," she said.

According to Alpen Capital, between 2011 and 2016, the GCC's retail sales are expected to grow at a compound annual growth rate (CAGR) of 7.7 per cent to reach $270.3 billion by the end of the forecast period.

Food retail sales are anticipated to expand at a CAGR of 8.8 per cent during this period while non-food retail sales are likely to grow at an annual average growth rate of 6.6 per cent.

Food sales growth will outperform non-food sales growth during the forecast period as high-value and healthier food products could find greater demand.

Sales of supermarkets and hypermarkets in the GCC are expected to grow at an annual average rate of 10.5 per cent between 2011 and 2016.

The relatively under-penetrated markets in terms of modern grocery retail formats like Saudi Arabia, Qatar and Kuwait are likely to outperform in this segment.

Duty free and travel retail sales in the Middle East are forecast to grow at a CAGR of 11.6 per cent from 2011 to 2016, outperforming the broader retail industry in terms of growth.

The growth projection has been revised upwards from the previous report primarily in anticipation of higher passenger traffic at the Abu Dhabi and Qatar airports and Concourse 3 plans at the Dubai Airport.

The outlook for the luxury segment remains positive and the luxury retail sales are expected to grow at a CAGR of 8.2 per cent between 2011 and 2016. – TradeArabia News Service